international employment law firm alliance L&E Global

Sweden: Court decision on disloyalty of employees who planned and prepared a competing business

Three employees had been planning and preparing for a competing business during their ongoing employment. A fourth person ran the competing business and the three employees did not act directly as representatives of the business. However, the Court found that the involvement and interest of the employees should be considered as they were partners in the business. The Court deemed the employees’ actions disloyal and that the actions had caused the employer to lose two clients. The Court found that the employees’ breach of the duty of loyalty resulted in a liability to pay economic damages of SEK 2,100,000 to the former employer. Furthermore, one of the employees had accessed trade secrets belonging to the employer. The Court found the employee and the business liable to pay SEK 100,000 in general damages for breaching the Act on the Protection of Trade Secrets. Two of the employees also breached the applicable collective agreement and the Court found them liable to pay general damages of SEK 200,000.